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Stanbic IBTC Holdings Plc 1Q 2014 financial results
 

Stanbic IBTC Holdings Plc 1Q 2014 financial results

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Stanbic IBTC Holdings Plc Listed on the Nigerian Stock Exchange has released its Quarterly Results. Check out ...

Stanbic IBTC Holdings Plc Listed on the Nigerian Stock Exchange has released its Quarterly Results. Check out
insights into this company in their results which appears below.
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Stanbic IBTC Holdings Plc 1Q 2014 financial results Stanbic IBTC Holdings Plc 1Q 2014 financial results Document Transcript

  • STANBIC IBTC HOLDINGS PLC UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2014
  • STANBIC IBTC HOLDINGS PLC UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2014 Table of contents Page Statement of financial position 1 Statement of profit or loss 2 Statement of comprehensive income 3 Statement of changes in equity 4 -5 Statement of cash flows 6 Notes to the condensed consolidated interim financial statements 7-28 Risk management 29
  • STANBIC IBTC HOLDINGS PLC Statement of profit or loss for the three months period ended 31 March 2014 31-Mar-14 31-Mar-13 31-Mar-14 31-Mar-13 Note N’million N’million N’million N’million 30,221 26,586 189 163 Net interest income 11,726 8,255 - - Interest income 15.1 17,019 14,666 - - Interest expense 15.2 (5,293) (6,411) - - Non-interest revenue 13,085 11,872 189 163 Net fee and commission revenue 15.3 8,936 6,968 185 163 Fee and commission revenue 15.3 9,053 7,016 185 163 Fee and commission expense 15.3 (117) (48) - - Trading revenue 15.4 4,101 4,887 - - Other revenue 48 17 4 - Total income 24,811 20,127 189 163 Credit impairment charges 15.5 (1,195) (1,885) - - 23,616 18,242 189 163 Operating expenses (14,647) (13,503) (345) (178) Staff costs 15.6 (6,418) (5,910) (104) (85) Other operating expenses 15.6 (8,229) (7,593) (241) (93) Profit before tax 8,969 4,739 (156) (15) Income tax (2,072) (1,166) 40 4 Profit for the period 6,897 3,573 (116) (11) Profit attributable to: Non-controlling interests 651 391 - - Equity holders of the parent 6,246 3,182 (116) (11) Profit for the period 6,897 3,573 (116) (11) Basic /diluted earnings per ordinary share (kobo) 16 62 32 (1) - The accompanying notes form an integral part of these financial statements Page 2 Earnings per share Group Company Income after credit impairment charges Gross earnings View slide
  • STANBIC IBTC HOLDINGS PLC Statement of comprehensive income for the three months period ended 31 March 2014 31-Mar-14 31-Mar-13 31-Mar-14 31-Mar-13 Note N’million N’million N’million N’million Profit for the period 6,897 3,573 (116) (11) Other comprehensive income Items that will never be reclassified to profit or loss - - - - Items that are or may be reclassified subsequently to profit or loss: Net change in fair value of available-for-sale financial assets (245) 1 073 - - - (467) - - Income tax on other comprehensive income - - - - (245) 606 - - Other comprehensive income for the period, net of tax (245) 606 - - Total comprehensive income for the period 6,652 4,179 (116) (11) Total comprehensive income attributable to: Non-controlling interests 653 366 - - Equity holders of the parent 5,999 3,813 (116) (11) 6,652 4,179 (116) (11) The accompanying notes form an integral part of these financial statements Page 3 CompanyGroup Realised fair value adjustments on available-for-sale financial assets reclassified to income statement View slide
  • STANBIC IBTC HOLDINGS PLC Statement of changes in equity for the three months period ended 31 March 2014 Ordinary Statutory Available-for- Share-based Other Ordinary Non- share Share Merger credit risk sale revaluation payment regulatory Retained shareholders' controlling Total note capital premium reserve reserve reserve reserve reserves earnings equity interest equity Group N’million N’million N’million N’million N’million N’million N’million N’million N’million N’million N’million Balance at 1 January 2013 5,000 65,450 (19,123) - (68) 362 16,420 15,300 83,341 2,310 85,651 Total comprehensive (loss)/income for the period 606 - 3,182 3,788 366 4,154 Profit for the period 3,182 3,182 391 3,573 Other comprehensive (loss)/income after tax for the period 606 - 606 ( 25) 581 Net change in fair value on available-for-sale financial assets 1,073 1,073 (25) 1,048 Realised fair value adjustments on available-for-sale financial assets (467) (467) (467) Income tax on other comprehensive income - - Transactions with shareholders, recorded directly in equity - - - - - - Equity-settled share-based payment transactions - Dividends paid to equity holders - Dividends paid to equity holders - - Balance at 31 March 2013 5,000 65,450 (19,123) - 538 362 16,420 18,482 87,129 2,676 89,805 Balance at 1 January 2014 5,000 65,450 (19,123) 769 221 273 18,859 22,864 94,313 3,321 97,634 Total comprehensive income/(loss) for the period (247) 6,246 5,999 653 6,652 Profit for the period 6,246 6,246 651 6,897 Other comprehensive income/(loss) after tax for the period (247) (247) 2 (245) Net change in fair value on available-for-sale financial assets (247) (247) 2 (245) Realised fair value adjustments on available-for-sale financial assets - - Other - Transactions with shareholders, recorded directly in equity - - - - - 12 - - 12 - 12 Equity-settled share-based payment transactions 12 12 12 Dividends paid to equity holders Balance at 31 March 2014 5,000 65,450 (19,123) 769 (26) 285 18,859 29,110 100,324 3,974 104,298 The accompanying notes form an integral part of these financial statements Page 4
  • STANBIC IBTC HOLDINGS PLC Statement of changes in equity for the three months period ended 31 March 2014 Available-for- Share-based Other Ordinary Ordinary Share sale revaluation payment regulatory Retained shareholders' share capital premium reserve reserve reserves earnings equity Company N’million N’million N’million N’million N’million N’million N’million Balance at 1 January 2013 5,000 65,450 - - - 1,053 71,503 Total comprehensive income/(loss) for the period - (11) (11) Profit for the period - - - - - (11) (11) Other comprehensive income/(loss) after tax for the period - - - - - - - Net change in fair value on available-for-sale financial - - - - - - - assets - - - - - - - Realised fair value adjustments on available-for-sale - - - - - - - financial assets - - - - - - - Other - - - - - - - - - - - - - - Transactions with shareholders, recorded directly in equity - - - - - - - Equity-settled share-based payment transactions - - - - - Dividends paid to equity holders - - Balance at 31 March 2013 5,000 65,450 - - - 1,042 71,492 Balance at 1 January 2014 5,000 65,450 - 8 - 1,388 71,846 Total comprehensive income/(loss) for the period - (116) (116) Profit for the period - - - - - (116) (116) Other comprehensive income/(loss) after tax for the period - - - - - - - Net change in fair value on available-for-sale financial - - - - - - - assets - - - - - - - Realised fair value adjustments on available-for-sale - - - - - - - financial assets - - - - - - - Other - - - - - - - - - - - - - - Transactions with shareholders, recorded directly in equity - - - 1 - - 1 Equity-settled share-based payment transactions - 1 - - 1 Dividends paid to equity holders Balance at 31 March 2014 5,000 65,450 - 9 - 1,272 71,731 The accompanying notes form an integral part of these financial statements Page 5
  • STANBIC IBTC HOLDINGS PLC Statement of cash flows for the three months period ended 31 March 2014 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 N million N million N million N million Net cash flows from operating activities 15,954 45,549 (606) 75 Cash flows used in operations 4,752 37,322 (606) 75 Profit before tax 8,969 4,739 (156) (15) Adjusted for: (9,612) (5,441) 31 - Credit impairment charges on loans and advances 1,195 1,885 - - Depreciation of property and equipment 924 875 30 - Dividends included in other revenue - - - Equity-settled share-based payments 12 - 1 - Interest expense 5,293 6,411 - - Interest income (17,019) (14,666) - - Loss/(profit) on sale of property and equipment (17) 54 - - Increase in income-earning assets (16,439) (179,431) (818) (1,579) Increase in deposits and other liabilities 21,834 217,455 337 1,669 Dividends received - - - - Interest paid (5,293) (6,411) - - Interest received 17,019 14,666 - - Direct taxation paid (524) (28) - - Net cash flows used in investing activities 7,531 (24 267) (12) (75) Capital expenditure on - property - - - - equipment, furniture and vehicles (418) (226) (14) (75) 345 53 2 - Investment in financial investment securities 7,604 (24,094) - Net cash flows used in financing activities 16,263 (14 793) - - Net increase/(decrease) in other borrowings 16,263 (14,793) - - Net dividends paid - - - - 886 (138) - - 40,634 6,351 (618) - Cash and cash equivalents at beginning of the period 120,312 106,680 2,722 2,625 Cash and cash equivalents at end of the period 160,946 113,031 2,104 2,625 The accompanying notes form an integral part of these financial statements Page 6 Net increase in cash and cash equivalents CompanyGroup Effect of exchange rate changes on cash and cash equivalents Proceeds from sale of property, equipment, furniture and vehicles
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements for the three months period ended 31 March 2014 1 Reporting entity 2 Basis of preparation (a) Statement of compliance (b) Basis of measurement • derivative financial instruments are measured at fair value • financial instruments at fair value through profit or loss are measured at fair value • available-for-sale financial assets are measured at fair value • liabilities for cash-settled share-based payment arrangements are measured at fair value • trading liabilities are measured at fair value (c) Functional and presentation currency (d) Use of estimates and judgement 3 Statement of significant accounting policies 3.1 New standards, interpretations and amendments adopted by the group Offsetting financial assets and financial liabilities - Amendments to IAS 32 Page 7 On 1 January 2014, the group adopted the following significant new standards and revisions to standards for which the financial effect is insignificant to these interim consolidated financial statements: Amendments to IAS 32 “Financial instruments: Presentation” clarify the meaning of ’currently has a legally enforceable right to set-off’ and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. Stanbic IBTC Holdings PLC (the 'company') is a company domiciled in Nigeria. The address of the company is IBTC Place, Plot 1C Walter Carrington Crescent, Victoria Island, Lagos. The condensed consolidated interim financial statements as at and for the three months ended 31 March 2014 comprise the company and its subsidiaries (together referred to as the 'group'). The group is primarily involved in the provision of banking and other financial services to corporate and individual customers. Except as described below, the accounting policies applied by the group in preparation of these condensed interim financial statements are consistent with those applied by the group in the preparation of its consolidated annual financial statements for the year ended 31 December 2013. The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the group since the last annual consolidated financial statements as at and for the year ended 31 December 2013. The condensed consolidated interim financial statements was approved by the Board of Directors on 16 April 2014. The condensed consolidated interim financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: The condensed consolidated interim financial statements are presented in Nigerian Naira, which is the company's functional and presentation currency. All financial information presented in Naira has been rounded to the nearest million, except when otherwise stated. The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2013. This condensed consolidated interim financial statement does not include all the information required for full annual financial statements prepared in accordance with International Financial reporting Standards (IFRS), and should be read in conjunction with the consolidated financial statements as at and for the year ended 31 December 2013.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements for the three months period ended 31 March 2014 3.1 Standards adopted during the period ended 31 March 2014 (continued) Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) Recoverable amount disclosures for non-financial assets – Amendments to IAS 36 Novation of derivatives and continuation of hedge accounting – Amendments to IAS 39 IFRIC 21 Levies 3.2 Future accounting developments IFRS 9 "Financial Instruments"(amended) Page 8 The following new or revised standards and amendments which have a potential impact on the group or company are not yet effective for the period ended 31 March 2014 and have not been applied in preparing these interim financial statements. IFRS 9 will replace the existing standard on the recognition and measurement of financial instruments and requires all financial assets to be classified and measured on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. The amendments are effective for annual periods beginning on or after 1 January 2018. The impact on the financial statements has not yet been fully determined. The group will adopt this standard when it becomes effective. The amendments provide 'investment entities' (as defined) an exemption from the consolidation of particular subsidiaries and instead require that an investment entity measure the investment in each eligible subsidiary at fair value through profit or loss in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement. The amendments also require additional disclosure about why the entity is considered an investment entity, details of the entity's unconsolidated subsidiaries, and the nature of relationship and certain transactions between the investment entity and its subsidiaries. Further, an investment entity will be required to account for its investment in a relevant subsidiary in the same way in its consolidated and separate financial statements (or to only provide separate financial statements if all subsidiaries are unconsolidated). These amendments remove the unintended consequences of IFRS 13 Fair Value Measurement on the disclosures required under IAS 36 Impairment of Assets. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which an impairment loss has been recognised or reversed during the period. The interpretation clarifies that an entity recognises a liability for a levy no earlier than when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, no liability is recognised before the specified minimum threshold is reached. The interpretation requires these same principles to be applied in interim financial statements. Amendments to IAS 39 “Financial Instruments: Recognition and Measurement”: These amendments make it clear that there is no need to discontinue hedge accounting if a hedging derivative is novated, provided certain criteria are met. A novation indicates an event where the original parties to a derivative agree that one or more clearing counterparties replace their original counterparty to become the new counterparty to each of the parties. In order to apply the amendments and continue hedge accounting, novation to a central counterparty (CCP) must happen as a consequence of laws or regulations or the introduction of laws or regulations. IFRIC 21 is effective for annual periods beginning on or after 1 January 2014 and is applied retrospectively. It is applicable to all levies imposed by governments under legislation, other than outflows that are within the scope of other standards (e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation.
  • Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 4 Segment reporting Business unit Wealth Page 9 Corporate and investment banking services to larger corporates, financial institutions and international counterparties. Global markets – Includes foreign exchange, fixed income, interest rates, and equity trading. Transaction process and services - includes transactional banking and investors services. Transactional and lending products – Includes corporate lending and transactional banking businesses, custodial services, trade finance business and property-related lending. Investment banking – Include project finance, structured finance, equity investments, advisory, corporate lending, primary market acquisition, leverage finance and structured trade finance. The wealth group is made up of the company's subsidiaries, whose activities involve investment management, portfolio management, unit trust/funds management, and trusteeship. Corporate & Investment Banking Transactional and lending products – Transactions in products associated with the various points of contact channels such as ATMs, internet, telephone banking and branches. This includes deposit taking activities, electronic banking, cheque accounts and other lending products coupled with debit card facilities to both personal and business market customers. STANBIC IBTC HOLDINGS PLC The group is organised on the basis of products and services, and the segments have been identified on this basis. The principal business units in the group are as follows: Banking and other financial services to individual customers and small-to-medium-sized enterprises.Mortgage lending – Provides residential accommodation loans to mainly personal market customers. Instalment sale and finance leases – Provides instalments finance to personal market customers and finance of vehicles and equipment in the business market. Card products – Provides credit and debit card facilities for individuals and businesses. Personal & Business Banking
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 4 Segment reporting Operating segments 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 N million N million N million N million N million N million N million N million N million N million Net interest income 5,604 3,837 5,568 3,906 554 512 - - 11,726 8,255 Non-interest revenue 1,961 1,659 6,698 7,094 4,611 3,277 (185) (158) 13,085 11,872 Total income 7,565 5,496 12,266 11,000 5,165 3,789 (185) (158) 24,811 20,127 Credit impairment charges (889) (1,467) (306) (418) - - (1,195) (1,885) Income after credit impairment charges 6,676 4,029 11,960 10,582 5,165 3,789 (185) (158) 23,616 18,242 Operating expenses in banking activities (7,340) (7,383) (5,905) (4,742) (1,587) (1,536) 185 158 (14,647) (13,503) Staff costs (3,717) (3,711) (1,961) (1,509) (740) (690) - - (6,418) (5,910) Other operating expenses (3,623) (3,672) (3,944) (3,233) (847) (846) 185 158 (8,229) (7,593) Profit before direct taxation (664) (3,354) 6,055 5,840 3,578 2,253 - - 8,969 4,739 Direct taxation 375 801 (1,390) (1,265) (1,057) (702) - (2,072) (1,166) Profit for the period (289) (2,553) 4,665 4,575 2,521 1,551 - - 6,897 3,573 Page 10 Corporate & Investment Banking Wealth Eliminations GroupPersonal & Business Banking
  • Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N’million N’million N’million N’million 5 Cash and cash equivalents Coins and bank notes 14,222 16,481 - - Balances with central banks 86,013 66,018 - - Current balances with banks within Nigeria 14,038 10,866 2,104 2,722 Current balances with banks outside Nigeria 46,673 26,947 - - 160,946 120,312 2,104 2,722 6 Derivative assets and liabilities 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N’million N’million N’million N’million 6.1 Derivative assets Foreign exchange derivatives 1,862 422 - - Forwards 1,862 422 Options Interest rate derivatives 969 1,104 - - Forwards Swaps 969 1,104 Total derivative assets 2,831 1,526 - - 6.2 Derivative liabilities Foreign exchange derivatives 760 601 - - Forwards 760 601 Options Interest rate derivatives 251 484 - - Forwards Swaps 251 484 Total derivative liabilities 1,011 1,085 - - Page 11 Increase in derivative portfolio reflects growth in volume of foreign currency forward exchange transactions as well as decline in Naira/USD$ rate by 2% during the period. STANBIC IBTC HOLDINGS PLC CompanyGroup Cash and balances with central bank include N56,036 million (Dec. 2013: N51,603 million) that is not available for use by the group on a day to day basis. These restricted balances comprise primarily reserving requirements held with Central Bank of Nigeria (CBN). The growth in cash and cash equivalents resulted from increase in current account balances with foreign correspondent bank on the back of growth in letters of credit transactions. Group Company
  • Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 7 Trading assets and trading liabilities 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 7.1 Trading assets Classification Listed 42,091 40,711 - - Unlisted 18,327 - - - 60,418 40,711 - - Comprising: Government bonds 1,557 2,634 - - Treasury bills 40,533 38,026 - - Listed equities 1 51 - - Reverse repurchase agreements 13,412 - - - Placements 4 915 - - - 60,418 40,711 - - 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 7.2 Trading liabilities Classification Listed 18,219 6,438 - - Unlisted 44,661 60,522 - - 62,880 66,960 - - Comprising: Government bonds (short positions) 3,676 1,714 - - Deposits 44,661 60,522 - - Treasury bills (short positions) 14,543 4,724 - - 62,880 66,960 - - Page 12 Company STANBIC IBTC HOLDINGS PLC Group CompanyGroup Trading assets and trading liabilities mainly relates to client-facilitating activities carried out by the Global Markets business. These instruments are managed on a combined basis and should therefore be assessed on a total portfolio basis and not as stand-alone assets and liability classes. Growth in trading portfolio is mainly as a result of reverse repo transaction with a bank counterparty at period end.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 8 Financial investments Short - term negotiable securities 120,242 125,695 - - Listed 120,242 125,695 - - Unlisted - - - - Other financial investments 11,213 13,609 - - Listed 8,750 11,001 - - Unlisted 2,463 2,608 - - 131,455 139,304 - - 8.1 Comprising: Government bonds 5,891 9,781 Treasury bills 120,242 125,695 Corporate bonds 1,713 1,867 Unlisted equities 750 741 Mutual funds and unit-linked investments 2,859 1,220 - - 131,455 139,304 - - All financial investment of the group are classified as available for sale Investments. Page 13 Decrease in financial investments reflects government securities sold during the period for liquidity management purposes. Group Company
  • Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 201431 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 9 Loans and advances Loans and advances net of impairments Loans and advances to banks 68,158 94,180 - - Call loans - - - Placements 68,158 94,180 - - Loans and advances to customers 306,655 289,747 - - Gross loans and advances to customers 321,513 303,306 - - Mortgage loans 7,842 8,667 - - Instalment sale and finance leases 27,316 27,012 - - Card debtors 675 850 - - Overdrafts and other demand loans 34,881 32,676 - - Medium term loans 248,101 232,635 - - Others loans and advances 2,698 1,466 - - Credit impairments for loans and advances (14,858) (13,559) 0 0 Specific credit impairments (9,651) (8,972) 0 0 Portfolio credit impairments (5,207) (4,587) 0 0 Net loans and advances 374,813 383,927 - - Comprising: Gross loans and advances 389,671 397,486 - - Less: Credit impairments (14,858) (13,559) - - Net loans and advances 374,813 383,927 - - Page 14 Company The growth in loan book is supported by our growing customer relationships but was affected by the sustained high interest rate environment and competition for good quality corporate credit. The group’s non-performing loan book increased by 7% in 1Q 2014 to close at N14.4 billion from N13.4 billion at the end of 2013. The increase is attributable to the newly classified loans in response to the trading environment. Consequently, the ratio of non-performing loans to total loans deteriorated slightly to 4.5% from 4.4% in Q4 2013. STANBIC IBTC HOLDINGS PLC Group
  • Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 10 Deposit and current accounts Deposits from banks 58,544 51,686 - - Deposits from banks 58,544 51,686 Deposits from customers 452,362 416,352 - - Current accounts 227,893 198,320 Call deposits 29,786 52,927 Savings accounts 19,392 19,097 Term deposits 164,835 130,940 Negotiable certificate of deposits 10,456 15,068 - - Total deposits and current accounts 510,906 468,038 - - 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 11 Other borrowings FMO - Netherland Development Finance Company 2,491 3,595 - - European Investment Bank 2,374 2,275 - - Bank of Industry 6,482 6,479 - - Standard Bank Isle of Man 40,527 23,762 - - CBN Commercial Agricultural Credit Scheme (CACS) 13,153 12,653 - - 65,027 48,764 - - Page 15 Growth in other borrowing represents additional borrowing from Standard Bank Isle of Man applied mainly to fund growth in loans and advances to customers. The deposit book grew on the strength of the group's efforts to improve deposit base, leveraging on the enlarged delivery channels and growing customer base to deliver excellent service. Group Company Deposits from banks mainly comprise vostro deposits (i.e. current accounts of offshore correspondent banks with Stanbic IBTC Bank). The growth in vostro deposits is linked to the activity of the group's custody business and are utilised mainly for executing trades instruction on behalf of private custody clients. CompanyGroup STANBIC IBTC HOLDINGS PLC
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 12 Classification of financial instruments Accounting classifications and fair values Note Held-for- trading Designated at fair value Loans and receivables Available-for- sale Other amortised cost Total carrying amount Fair value 1 N million N million N million N million N million N million N million 31 March 2014 Assets Cash and balances with central banks 5 - - - - 160,946 160,946 160,946 Derivative assets 6 2,831 - - - - 2,831 2,831 Trading assets 7 60,418 - - - - 60,418 60,418 Pledged assets 8 - - - 24,484 - 24,484 24,484 Financial investments 8 - - - 131,455 - 131,455 131,455 Loans and advances to banks 9 - - 68,158 - - 68,158 68,289 Loans and advances to customers 9 - - 306,655 - - 306,655 306,655 Other financial assets - - 13,688 - - 13,688 13,688 63,249 - 374,813 155,939 160,946 768,635 768,766 Liabilities Derivative liabilities 6 1,011 - - - - 1,011 1,011 Trading liabilities 7 62,880 - - - - 62,880 62,880 Deposits from banks 10 - - - - 58,544 58,544 58,544 Deposits from customers 10 - - - - 452,362 452,362 452,362 Subordinated debt - - - - 6,624 6,624 5,895 Other borrowings - - - - 65,027 65,027 65,166 Other financial liabilities - - - - 35,939 35,939 35,939 63,891 - - - 546,845 610,736 610,736 Page 16 The table below sets out the group's classification of assets and liabilities, and their fair values.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 12 Classification of financial instruments continued Note Held-for- trading Designated at fair value Loans and receivables Available-for- sale Other amortised cost Total carrying amount Fair value 1 N million N million N million N million N million N million N million 31 December 2013 Assets Cash and balances with central banks 5 - - - - 120,312 120,312 120,312 Derivative assets 6 1,526 - - - - 1,526 1,526 Trading assets 7 40,711 - - - - 40,711 40,711 Pledged assets 8 - - - 24,733 - 24,733 24,733 Financial investments 8 - - - 139,304 - 139,304 139,304 Loans and advances to banks 9 - - 94,180 - - 94,180 94,164 Loans and advances to customers 9 - - 289,747 - - 289,747 259,076 Other financial assets - - 10,346 - - 10,346 10,346 42,237 - 383,927 164,037 120,312 720,859 690,172 Liabilities Derivative liabilities 6 1,085 - - - - 1,085 1,085 Trading liabilities 7 66,960 - - - - 66,960 66,960 Deposits from banks 10 - - - - 51,686 51,686 51,692 Deposits from customers 10 - - - - 416,352 416,352 415,625 Subordinated debt 6,399 6,399 5,721 Other financial liabilities - - - - 112,257 112,257 112,358 68,045 - - - 580,295 648,340 647,720 Page 17 1 Carrying value has been used where it closely approximates fair values. Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. Where available, the most suitable measure for fair value is the quoted market price. In the absence of organised secondary markets for financial instruments, such as loans, deposits and unlisted derivatives, direct market prices are not always available. The fair value of such instruments was therefore calculated on the basis of well-established valuation techniques using current market parameters. The fair value is a theoretical value applicable at a given reporting date, and hence can only be used as an indicator of the value realisable in a future sale.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 13 Financial instruments measured at fair value 13.1 Valuation models Level 1 - fair values are based on quoted market prices (unadjusted) in active markets for an identical instrument. Specific valuation techniques used to value financial instruments include: - Quoted market prices or dealer quotes for similar instruments; - - - 13.2 Valuation framework - verification of observable pricing - re-performance of model valuations; - review and approval process for new models and changes to models - calibration and back-testing pf models against observed market transactions; - analysis and investigation of significant daily valuation movements; and - Page 18 Valuation techniques include net present value and discounted cash flow models, comparison with similar instruments for which market observable prices exist, Black-Scholes and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, bonds and equity prices, foreign exchange rates, equity pricess and expected volatilities and correlations. The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, fair values are determined using other valuation techniques. The group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements. Level 2 - fair values are calculated using valuation techniques based on observable inputs, either directly (i.e. as quoted prices) or indirectly (i.e. derived from quoted prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less than active or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Level 3 - fair values are based on valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. Significant valuation issues are reported to the audit committee. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves; The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value; Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. Fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties, to the extent that the group believes that a third party market participant would take them into account in pricing a transaction. For measuring derivatives that might change classification from being an asset to a liability or vice versa such as interest rate swaps, fair values take into account both credit value adjustment (CVA) when market participants take this into consideration in pricing the derivatives. The group has an established control framework with respect to the measurement of fair values. This framework includes a market risk function , which has overall responsibility for independently verifying the results of trading operations and all significant fair value measurements, and a product control function , which is independednt of front office management and reports to the Chief Financial Officer. The roles performed by both functions include: review of significant unobservable inputs, valuation adjustments and significant changes to the fair value measurement of level 3 instruments.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 13.3 Financial instruments measured at fair value - fair value hierarchy Level 1 Level 2 Level 3 Total Group N million N million N million N million 31 March 2014 Assets Derivative assets - 2,831 - 2,831 Trading assets 1 60,417 - 60,418 Pledged assets - 24,484 - 24,484 Financial investments - 131,241 214 131,455 1 218,973 214 219,188 Comprising: Held-for-trading 1 63,248 - 63,249 Available-for-sale - 155,725 214 155,939 1 218,973 214 219 188 Liabilities Derivative liabilities - 1,011 - 1,011 Trading liabilities - 62,880 - 62,880 - 63,891 - 63,891 Comprising: Held-for-trading - 63,891 - 63,891 Designated at fair value - - 63,891 - 63,891 There have been no transfers between Level 1 and Level 2 during the period. Level 1 Level 2 Level 3 Total Group N million N million N million N million 31 December 2013 Assets Derivative assets - 1,526 - 1,526 Trading assets 51 40,660 - 40,711 Pledged assets - 24,733 - 24,733 Financial investments - 139,091 213 139,304 51 206,010 213 206,274 Comprising: Held-for-trading 51 42,186 - 42,237 Available-for-sale - 163,824 213 164,037 51 206,010 213 206,274 Liabilities Derivative liabilities - 1,085 - 1,085 Trading liabilities - 66,960 - 66,960 - 68,045 - 68,045 Comprising: Held-for-trading - 68,045 - 68,045 Designated at fair value - - - - 68,045 - 68,045 There have been no transfers between Level 1 and Level 2 during the period. Page 19 The tables below analyze financial instruments carried at fair value at the end of the reporting period, by level of fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 13.3 Level 3 fair value measurement (i) 31 Mar. 2014 31 Dec. 2013 Financial investments - unquoted equities N million N million Balance at 1 January Gain/(loss) recognised in other comprehensive income - (213) Balance at period end - (213) Gain or loss for the year in the table above are presented in the statement of other comprehensive income as follows: 31 Dec. 2013 31 Dec. 2012 N million N million Net change in fair value of available-for-sale financial assets - (213) (ii) Unobservable inputs used in measuring fair value Type of financial instrument Valuation technique Unquoted equities Discounted cash flow Page 20 The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurments in level 3 of the fair value hierarchy. The information below describes the significant unobservable inputs used at 31 March 2014 in measuring financial instruments categorised as level 3 in the fair value hierarchy. Significant unobservable input Fair value measurement sensitivity to unobservable input - Risk adjusted discount rate '- Cash flow estimates A significant increase in the spread above the risk-free rate would result in a lower fair value.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 13.4 Financial instruments not measured at fair value - fair value hierarchy Carrying amount Level 1 Level 2 Level 3 Total Group N million N million N million N million N million 31 March 2014 Assets Cash and cash equivalents 160,946 160,946 - - 160,946 Loans and advances to banks 68,158 - 60,418 - 60,418 Loans and advances to customers 306,655 - 306,655 - 306,655 Other financial assets 13,688 - 13,688 - 13,688 - 549,447 160,946 380,761 - 541,707 Liabilities Deposits from banks 58,544 58,544 - 58,544 Deposits from customers 452,362 277,071 175,291 - 452,362 Other borrowings 65,027 - 65,166 - 65,166 Subordinated debt 6,624 - 5,895 - 5,895 Other financial liabilities 35,939 - 35,939 - 35,939 618,496 277,071 340,835 - 617,906 Carrying amount Level 1 Level 2 Level 3 Total Group N million N million N million N million N million 31 December 2013 Assets Cash and cash equivalents 120,312 120,312 - - 120,312 Loans and advances to banks 94,180 - 94,164 - 94,164 Loans and advances to customers 289,747 - 259,076 - 259,076 Other financial assets 10,346 - 10,346 - 10,346 514,585 120,312 363,586 - 483,898 Liabilities Deposits from banks 51,686 - 51,692 - 51,692 Deposits from customers 416,352 270,621 145,004 - 415,625 Other borrowings 48,764 - 48,865 - 48,865 Subordinated debt 6,399 - 5,721 - 5,721 Other financial liabilities 63,493 - 63,493 - 63,493 586,694 270,621 314,775 - 585,396 Page 21 The following table set out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierachy into which each fair value measurement is categorised. Fair value of loans and advances is estimated using discounted cash flow techniques. Input into the valuation techniques includes interest rates and value of underlying collateral. Fair value of deposits from banks and customers is estimated using discounted cash flow techniques, applying the rates offered for deposits of similar maturities and terms. The fair value of deposits payable on demand is the amount payable at the reporting date. Fair value
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 13.5 Offsetting of financial assets and financial liabilities Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements The disclosures include financial assets and financial liabilities that: - are offset in the group's statement of financial position; or 31 Mar. 2014 31 Dec. 2013 31 Mar. 2014 31 Dec. 2013 N million N million N million N million 14 Contingent liabilities and commitments 14.1 Contingent liabilities Letters of credit 33,592 20,836 - - Guarantees 26,245 23,779 - - 59,837 44,615 - - 14.2 Capital commitments Contracted capital expenditure 238 445 - - Capital expenditure authorised but not yet contracted - - - - 238 445 - - The expenditure will be funded from the group's internal resources. 14.3 Legal proceedings Page 22 In the conduct of its ordinary course of business, the group is exposed to various actual and potential claims, lawsuits and other proceedings relating to alleged errors and omissions, or non-compliance with laws and regulations. The directors are satisfied, based on present information and the assessed probability of claims crystallising, that the group has adequate insurance programmes and provisions in place to meet such claims. There were a total of 153 legal proceedings outstanding as at 31 March 2014. 96 of these were against the group with claims amounting to N168.63 billion (Dec. 2013: N168.63 billion), while 57 other cases were instituted by the group with claims amounting to N3.80 billion (31 Dec. 2013: N4.23 billion). The claims against the group are being vigorously defended. It is not expected that the ultimate resolution of any of the proceedings will have a significant adverse effect on the financial position of the group. Letters of credit are agreements to lend to a customer in the future, subject to certain conditions. They are secured by different types of collaterals similar to those accepted for actual credit facilities. - are subject to an enforceable master netting agreement or similar agreement that covers similar financial instruments, irrespective of whether they are offset in the statement of financial position. The group had no offsetting financial assets and liabilities as at period end. Group Company Performance bonds and guarantees are generally short term commitments to third parties which are not directly dependent on the customer's credit worthiness.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 N million N million N million N million 15 Supplementary income statement information 15.1 Interest income Interest on loans and advances to banks 1,459 613 Interest on loans and advances to customers 10,417 10,072 - - Interest on investments 5,143 3,981 - - 17,019 14,666 - - All interest income reported above relates to financial assets not carried at fair value through profit or loss. 15.2 Interest expense Savings accounts 111 56 - - Current accounts 217 140 - - Call deposits 573 587 Term deposits 3,769 5,152 Interbank deposits 338 268 Borrowed funds 285 208 - - 5,293 6,411 - - All interest expense reported above relates to financial assets not carried at fair value through profit or loss. 15.3 Net fee and commission revenue Fee and commission revenue 9,053 7,016 185 163 Account transaction fees 720 984 - - Card based commission 412 282 - - Brokerage and financial advisory fees 1,311 649 185 163 Asset management fees 4,662 3,262 - - Custody transaction fees 562 668 - - Electronic banking 100 4 - - Foreign currency service fees 387 304 - - Documentation and administration fees 298 409 - - Other 601 454 - - Fee and commission expense (117) (48) - 8,936 6,968 185 163 15.4 Trading revenue Foreign exchange 3,114 1,456 - - Credit 394 619 - - Interest rates 608 2,807 - - Equities (15) 5 - - 4,101 4,887 - - 15.5 Credit impairment charges Net specific credit impairment charges 576 1,228 - - Specific credit impairment charges 806 1,350 (230) (122) Portfolio credit impairment charges/(reversal) 619 657 - - 1,195 1,885 - - Page 23 Group Company Recoveries on loans and advances previously written off
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 N million N million N million N million 15 Supplementary income statement information continued 15.6 Other operating expenses Information technology 1,225 1,088 - - Communication 198 176 - - Premises and maintenance 818 1,179 - - Marketing and advertising 522 424 55 12 Insurance 1,587 1,333 15 10 Professional fees 1,429 1,046 41 36 Depreciation 924 875 30 - Stationery and printing 121 167 - - Security 246 230 - - Travel and entertainment 283 306 - - Administration and membership fees 259 103 - 7 Training 85 111 - - Other 532 555 100 28 8,229 7,593 241 93 15.7 Income statement analysis Page 24 Operating expenses grew by 9%, keeping with inflation. Staff cost was up 9% as a result of by inflation related salary increases in latter part of the quarter, while the 8% increase in other operating expenses was supported by growth in insurance cost including NDIC and AMCON expenses and increases in information technology expenses for securing competitive advantage in business efficiency and marketing and advertising expenses to increase brand awareness. The cost-to-income ratio improved to 59.0% from 67.1% recorded in 1Q 2013. We are committed to ensuring that revenues continue to grow at a faster rate than cost growth. Overall, the group recorded an 89% growth in profit before tax to N9.0 billion, while profit after tax increased by 93% to N6.9 billion. Group Company Net interest income increased by 42%, benefiting from sustained growth in loans to customers and banks, good yields in investment securities and improved funding cost. Interest income grew by 16%, while interest expense declined by 17%. The reduction in interest expense is supported by the improvement in our deposit mix, as the ratio of low cost deposits to total deposits improved to 55% from 46% achieved in 1Q 2013 and 52% recorded at the end of 2013. Non-interest revenue, which comprise revenue from commissions, fees, trading and other non-interest bearing revenue, grew by 10% to N13.1 billion (1Q 2013: N11.9 billion). The growth in non-interest revenue is primarily attributable to a 29% increase in net fee and commission revenue to N8.9 billion from N7.0 billion in 1Q 2013, although muted by the regulatory induced reduction in transaction fees and the bearish performance of the stock market. The growth in net fee and commission revenue is driven by increased transactional volumes and activities aided by increased in number of customers, increased card related fees, a function of the high ATM uptime, steady growth within our wealth business and good advisory mandates in investment banking. Credit impairment charges declined by 37% to N1.2 billion (1Q 2013: N1.9 billion), benefitting from recoveries on loans and advances previously written off. We continued to maintain prudent approach to credit impairments in line with the realities of the operating environment.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 31 Mar. 2014 31 Mar. 2013 31 Mar. 2014 31 Mar. 2013 N million N million N million N million 16 Earnings per ordinary share 6,246 3,182 (116) (11) 10,000 10,000 10,000 10,000 Basic earnings per ordinary share (kobo) 62 32 (1) - Diluted earnings per ordinary share Page 25 Group Company The calculation of basic earnings per ordinary share and diluted earnings per ordinary share are as follows: Earnings attributable to ordinary shareholders (N million) Weighted average number of ordinary shares in issue Weighted average number of ordinary shares in issue (number of shares) Basic earnings per ordinary share equals diluted earnings per share as there are no potential dilutive ordinary shares in issue. Earnings based on weighted average shares in issue
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 17 Related party transactions 17.1 Parent 17.2 Subsidiaries Details of effective interest in subsidiaries are disclosed below. Stanbic IBTC Bank PLC 100% Stanbic IBTC Ventures Limited ("SIVL") 100% Stanbic IBTC Capital Limited 100% Stanbic IBTC Asset Management Limited ("SIAML") 100% Stanbic IBTC Pension Managers Limited ("SIPML") 70.59% Stanbic Nominees Nigeria Limited ("SNNL") 100% Stanbic IBTC Stockbrokers Limited ("SISL") 100% Stanbic IBTC Trustees Limited ("SITL") 100% 17.3 Key management personnel 31 Mar. 2014 31 Mar. 2013 N million N million Key management compensation Salaries and other short-term benefits 206 185 Post-employment benefits 4 4 Value of share options and rights expensed - - 210 189 The transactions below are entered into in the normal course of business. 31 Mar. 2014 31 Dec. 2013 N million N million Loans and advances Loans outstanding at the beginning of the period 215 422 Net movement during the period (46) ( 207) Loans outstanding at the end of the period 169 215 Deposit and current accounts Deposits outstanding at beginning of the period 717 574 Net movement during the period 724 143 Deposits outstanding at end of the period 1,441 717 Deposits include cheque, current and savings accounts. Page 26 Key management personnel includes: members of the Stanbic IBTC Holdings PLC board of directors and Stanbic IBTC Holdings PLC executive committee. Non-executive directors are included in the definition of key management personnel as required by IAS 24 Related Party Disclosure. The definition of key management includes the close members of family of key management personnel and any entity over which key management exercise control, joint control or significant influence. Close members of family are those family members who may be expected to influence, or be influenced by that person in their dealings with Stanbic IBTC Holdings PLC. They include the person's domestic partner and children, the children of the person's domestic partner, and dependents of the person or the person's domestic partner. Loans include mortgage loans, instalment sale and finance leases and credit cards. No specific impairments have been recognised in respect of loans granted to key management (2011: nil). The mortgage loans and instalment sale and finance leases are secured by the underlying assets. All other loans are unsecured. Standard Bank Group ("SBG") of South Africa is the ultimate holding company of Stanbic IBTC Holdings PLC.
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 17 Related party transactions continued 17.4 Transactions with Ultimate Holding company (Standard Bank Group) 31 Mar. 2014 31 Mar. 2013 N million N million Revenue Trading revenue - (Loss)/profit (256) 48 Net interest income (281) (176) Total revenue earned (537) (128) 31 Mar. 2014 31 Dec. 2013 N million N million Loans to group entities Loans outstanding at the beginning of the period 21,392 25,647 Net loans given/(repaid) during the period (13,251) (4,255) Loans outstanding at the end of the period 8,141 21,392 Deposits from group entities Deposits outstanding at the beginning of the period 99,256 49,248 Net deposits received/(repaid) during the period (50,101) 50,008 Deposits outstanding at the end of the period 49,155 99,256 Page 27
  • STANBIC IBTC HOLDINGS PLC Notes to the condensed consolidated interim financial statements (continued) for the three months period ended 31 March 2014 18 Summarised financial statements of the consolidated entities Stanbic IBTC Holdings PLC Company Stanbic IBTC Bank PLC Stanbic IBTC Capital Ltd Stanbic IBTC Pension Managers Ltd Stanbic IBTC Asset Mgt Ltd Stanbic IBTC Ventures Ltd Stanbic IBTC Trustees Ltd Stanbic IBTC Stockbrokers Ltd Consoli-dations / Elimina -tions Stanbic IBTC Holdings PLC Group N’million N’million N’million N’million N’million N’million N’million N’million N’million N’million Income statement Net interest income - 11,095 - 436 112 20 6 57 - 11,726 Non interest revenue 189 7,312 653 4,186 462 1 25 442 (185) 13,085 Total income 189 18,407 653 4,622 574 21 31 499 (185) 24,811 Staff costs (104) (5,159) (352) (552) (168) - (20) (63) - (6,418) Operating expenses (241) (6,931) (116) (900) (88) (2) (10) (126) 185 (8,229) Credit impairment charges - (1,195) - - - - - - - (1,195) Total expenses (345) (13,285) (468) (1,452) (256) (2) (30) (189) 185 (15,842) Profit before tax (156) 5,122 185 3,170 318 19 1 310 - 8,969 Tax 40 (935) (43) (955) (75) - - (104) - (2,072) Profit for the period (116) 4,187 142 2,215 243 19 1 206 - 6,897 At 31 March 2013 (11) 2,048 (213) 1,330 219 4 3 193 - 3,573 Statement of financial position 31 March 2014 Total assets 75,623 775,521 7,196 21,168 4,762 2,300 255 3,502 (80,456) 809,871 Liabilities 3,892 700,944 1,420 7,537 1,416 241 109 1,759 (11,745) 705,573 Equity and reserves 71,731 74,577 5,776 13,631 3,346 2,059 146 1,743 (68,711) 104,298 Page 28
  • Risk management for the three months period ended 31 March 2014 Group Group 31 Mar. 2014 31 Dec. 2013 N’million N’million Tier 1 capital: Share capital 5,000 5,000 Share premium 65,450 65,450 Statutory credit reserve 769 769 Retained earnings 22,864 22,864 Other reserves 21 9 Deferred tax asset and intangible assets (7,342) (7,716) Total qualifying Tier 1 capital 86,762 86,376 Tier 2 capital: Non-controlling interest 3,974 3,321 Available-for-sale reserve (26) 221 Subordinated debt 6,624 6,399 Total qualifying Tier 2 capital 10,572 9,941 Total regulatory capital 97,334 96,317 Risk-weighted assets: On-balance sheet 387,361 360,162 Off-balance sheet 46,715 32,726 Total risk-weighted assets 434,076 392,888 Capital adequacy ratio 22.42% 24.52% Page 29 Capital management The table below summarises the composition of regulatory capital and the ratios of the group for the period ended 31 March 2014. During the period, the individual entities within the group and the group complied with all of the externally imposed capital requirements to which they are subject. Risk management is at the core of the operating and management structures of the group. The group seeks to limit adverse variations in earnings and equity by managing the balance sheet and capital within specified levels of risk appetite. Managing and controlling risks, and in particular avoiding undue concentrations of exposure and limiting potential losses from stress events are essential elements of the group’s risk management and control framework, which ultimately leads to the protection of the group’s reputation and brand. STANBIC IBTC HOLDINGS PLC Risk management The most important types of risk arising from financial instruments are credit risk, liquidity risk and market risk. The management of these risks is discussed in the consolidated financial statements of the group as at and for the year ended 31 December 2013. There have been no significant change in the group's risk factors and uncertainties relative to those described in the consolidated financial statements as at and for the year ended 31 December 2013. Furthermore, no major change in the coming three months is anticipated to date.